Private banks in India recorded a sharp widening of fresh lending spreads in July, with the rate charged on new advances rising by 22 basis points to 3.13%.
The move came as FCNR(B) inflows improved liquidity and reduced reliance on expensive wholesale funding.
The increase in spreads for private banks was nearly double the level seen at public sector banks.
Analysts cautioned that margin gains could prove gradual and difficult to sustain.
For borrowers and investors, the shift could influence lending costs and bank profitability, while regulators will watch whether these margin gains prove durable as liquidity conditions evolve.
